Since the end of December we’ve been writing about the coming bottom in precious metals. Our forecast for 2013 was to see a low in Q1 and then continued consolidation until the end of the summer in which Gold could be in good position to break $1800. That forecast remains largely intact, although it appears the mining stocks will bottom quite a bit lower than we thought two months ago and even five months ago. Three weeks ago we noted that a potential final bottom was on the way. After beating around the bush we are ready to say that now is the time to begin buying and we’ll show you why. ...

As we get ready to kickoff trading at the start of a new week, today the man who has become legendary for his predictions on QE and historic moves in currencies, told King World News that this ticking time bomb that represents a staggering 1,070-times all central bank gold will unleash the next global crisis.

An interesting study by a Phd candidate at the University of Chicago is being released which shows a statistically high incidence in taxi trips between the NY Fed and big NY banks clustered around FOMC meetings:

Mr. Finer writes that “highly statistically significant patterns in New York City yellow taxi rides suggest that opportunities for information flow between individuals present at the New York Fed and individuals present at major commercial banks increase around” meetings of the interest-rate setting FOMC.

Dr. Paul Craig Roberts sent me an article by Catherine Austin Fitts and asked if I had read it. The article is titled, “The State of America’s Pension Funds.” The article is worth reading, though I believe Ms. Fitts underestimates significantly the degree to which political and Wall Street criminality – along with money management incompetence – has infected and destroyed the U.S. pension system – both public and private. Furthermore, I believe she errs in her believe that the pension crisis can be fixed.

I’ve re-posted below my view of the looming pension system melt-down that I shared with Dr. Roberts.

Markets were up again big today and volatility was down. But we haven’t seen the last of rising volatility, nor of the central banks’ attempts to thwart it. This week, new Fed Chair Jerome Powell will be giving his first congressional testimony, and you can be sure that markets are waiting on his words with bated breath. Before his testimony, the Fed will be releasing its Monetary Policy Report, which will also give an indication to the direction of Fed policy. Because these will be his first official comments as Fed chair, Powell will want to both make a personal mark and make sure markets don’t panic over his remarks. I believe he will temper his comments to neutralize any negative market impact the report could have. ...

If a currency can't be converted on demand into the underlying commodity, it's not "backed by oil," it's just another form of control fraud. The broke and broken country of Venezuela appears to be the first nation-state to issue a cryptocurrency token (the petro) as a means of escaping the financial black hole that's consuming its economy: Maduro Launches Oil-Backed Crypto "For The Welfare Of Venezuela". For context, here is a chart of the black market (i.e. real-world) value of the Venezuela's fiat currency, the bolivar: a 100,000 bolivar note is worth somewhere around 40 cents USD (US dollar), i.e. near zero. (Venezuela maintains a fantasy-official USD/bolivar exchange rate that has no relation to the actual purchasing-power value of Venezuela's fiat currency.)

The central banks'/states' power to maintain a permanent bull market in stocks and bonds is eroding. There is nothing natural about the stability of the past 9 years. The bullish trends in risk assets are artificial constructs of central bank/state policies. As these policies are reduced or lose their effectiveness, the era of artificial stability is coming to a close. The 9-year run of Bull-trend stability is ending as a result of a confluence of macro dynamics: 1. Central banks are under pressure to reduce, end or reverse their unprecedented monetary stimulus, and the consequences are unpredictable, given the market's reliance on the certainty that "central banks have our back" is ending.

The tragedy is so few act when the collapse is predictably inevitable, but not yet manifesting in daily life. That chill you feel in the financial weather presages an unprecedented--and for most people, unexpectedly severe--winter of discontent. Rather than sugarcoat what's coming, let's speak plainly for a change: none of the promises that have been made to you will be kept. This includes explicit promises to provide income security and healthcare entitlements, etc., and implicit promises that don't need to be stated: a currency that holds its value, high-functioning public infrastructure, etc. Nearly "free" (to you) healthcare: no. Generous public pensions: no.

For many decades the Federal Reserve has rigged the bond market by its purchases. And for about a century, central banks have set interest rates (mainly to stabilize their currency’s exchange rate) with collateral effects on securities prices. It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals, and to push prices back up in keeping with a decade of money creation.

No one should find this a surprising suggestion. The Bank of Japan has a long tradition of propping up the Japanese equity market with large purchases of equities. The European Central Bank purchases corporate as well as government bonds. In 1989 Fed governor Robert Heller said that as the Fed already rigs the bond market with purchases, the Fed can also rig the stock market to stop price declines. That is the reason the Plunge Protection Team (PPT) was created in 1987.

Keeping up with seasonal trends, this January too was positive for gold.

The fact that two big gold buyers, India and China, get involved during the period brings in the positive bias. India loads up in preparation of the ensuing wedding season and China readies for the Lunar New Year.

From an economic perspective, gold’s rise since mid-December has coincided with the US dollar's free-fall that began just after the US Fed raised interest rates for the fifth time since the rate-hike cycle began in December of 2015. However, stronger than expected jobs data accompanied by hawkish Fed rhetoric took some sheen off gold. All in all, gold managed a close at $1345.15 an ounce clocking gains of 3.2% for the month.

If targeting political extremes generates the most profit, then that's what these corporations will pursue. As many of you know, oftwominds.com was falsely labeled propaganda by the propaganda operation known as ProporNot back in 2016. The Washington Post saw fit to promote ProporNot's propaganda operation because it aligned with the newspaper's view that any site that wasn't pro-status quo was propaganda; the possibility of reasoned dissent has vanished into a void of warring accusations of propaganda and "fake news" --which is of course propaganda in action. Now we discover that profit-maximizing data-mining (i.e. Facebook and Google) can--gasp--be used for selling ideologies, narratives and candidates just like dog food and laundry detergent. The more extreme and fixed the views and the closer the groups are in size (i.e. the closer any electoral contest), the more profitable the corporate data-mining becomes.

Despite the absence of any empirical support, Fed governors and staff economics persist in their reliance on the Phillips Curve, which predicts that low unemployment leads to rising inflation. U.S. unemployment at around 4% is in fact at 17-year lows.

The Fed insists that the time to tighten monetary conditions is now, before the inflation emerges.

Yet as I’ve explained many times, the Phillips Curve bears no correspondence to reality. The 1960s were characterized by low unemployment and rising inflation. The late 1970s were characterized by high unemployment and high inflation. The 2010s have been characterized by low unemployment and low inflation.

Hal's insight:

Click through for the rest. This is one of the reasons that I am worried about what leaders will do to either fix or save face or distract from the reality.

The Return Of Gold March 8 (King World News) – Multi-billionaire Hugo Salinas Price: There is a lot of commentary going around the world, regarding Trump’s initiation of a “Trade War” to rebuild America’s industries. Trump thinks that tariffs will do the trick, and stop the rest of the world from taking unfair advantage of the US by selling their goods to the US in exchange for lots of US dollars. According to Trump, this nefarious behavior on the part of the rest of the world is causing a h-u-u-u-ge Trade Deficit, sending hundreds of billions of dollars out of the country. Trump’s view is that this is just plain “unfair”…

So who's holding the hot potato of systemic risk now? Everyone. One of the greatest con jobs of the past 9 years is the status quo's equivalence of risk and volatility: risk = volatility: so if volatility is low, then risk is low. Wrong: volatility once reflected specific short-term aspects of risk, but measures of volatility such as the VIX have been hijacked to generate the illusion that risk is low. But even an unmanipulated VIX doesn't reflect the true measure of systemic risk, a topic Gordon Long and I discuss in our latest program, The Game of Risk Transfer. The financial industry has reaped enormous "guaranteed" gains by betting against volatility. As volatility steadily declined over the past two years, billions of dollars were reaped by constantly betting that volatility would continue declining.

Yesterday, the Fed released the minutes from its January Federal Open Market Committee (FOMC) meeting.

The minutes revealed that most members expect higher economic growth ahead, indicating that “further gradual policy firming would be appropriate.”

Stocks initially rallied when the report was released, since it didn’t appear to raise fears of rapidly rising inflation. It seemed to indicate only a gradual path of rate hikes. The Dow surged 300 points after the report came out.

But the bond market took the report with more urgency. The bond market indicated the Fed might be more aggressive, possibly raising rates as many as four times this year. Yields on the 10-year Treasury spiked to 2.95% — a four-year high.

Money manager Michael Pento says recently rising interest rates are signaling big trouble for the economy. Pento contends, “There are so many things that can go wrong with rising interest rates. First of all, you have to understand that the permabulls that you hear on CNBC will tell you there is nothing wrong with rising interest rates. It is a symbol of growth. If you look at industrial production and retail sales for January, they were negative. So, rising rates are occurring, not because of growth, they are caused by insolvency concerns. That is the key metric here, and they are credit risks and insolvency concerns.”

Who is insolvent? Pento says, “Europe is insolvent. The United States is insolvent. . . . We have $21 trillion in debt. That’s seven times our revenue. So, we are technically insolvent. You haven’t seen anything yet because as interest rates rise, debt service expenses rise. . . . Certainly, beyond a shadow of doubt, the Bank of Japan is insolvent.” ...

Tonight I would like to step back and take a serious look at silver. I believe the chartology is beginning to speak to us that this is a huge opportunity that is setting up right now for those who can be a little patient. But first let’s take a quick look at todays market.

That’s a screen shot I took off of the lead headline on Drudge today, so the public now knows…the cats out of the bag. That’s right you heard it here first as weeks ago this theme was outlined and made clear that it was coming our way in a hurry. The PM markets responded accordingly.

In the weekend report it was pointed out that we should all keep out eye on the VIX. If the VIX stayed elevated expect more trouble for the stock market, it it dropped below 20 then we could expect the market to have a decent rally or even recover its losses of the past 10 days. Well today we got the move below 20 and the market is starting to look a bit better as the chart below shows.

No change for inflation, despite falling food prices. However, the picture for the rest of the year suggests that inflation will fall as a result of the effects of the depreciation of the pound being stripped out of the index and the prospect of rising interest rates.

In his latest report, economist John Williams asks the question, “Did the Fed trigger the stock sell-off?” Williams answer, “It sure looks that way. With all the heave [sec] selling, the bond yields were rising and investors didn’t like that. Risings bond yields means someone is selling bonds. The Fed was not selling bonds, they were not rolling over the bonds they normally wood [sec]. . . . There was a big drop in the amount of bonds the Fed was holding in the last week by about $10 billion. That was the biggest weekly decline since August of 2012. . . . It was enough to put some upside pressure on the interest rates . . . and that was a trigger (for the stock market sell-off). Normally, you don’t crash from an all-time high, not that it crashed, but you did have pretty heavy selling. You didn’t see much movement in the dollar. You didn’t see much movement in gold, and when this market really goes, I think you are going to see the dollar selling off very rapidly and gold being a flight to safe haven.”

The illusion that risk can be limited delivered three asset bubbles in less than 20 years. Has anything actually changed in the past two weeks? The conventional bullish answer is no, nothing's changed; the global economy is growing virtually everywhere, inflation is near-zero, credit is abundant, commodities will remain cheap for the foreseeable future, assets are not in bubbles, and the global financial system is in a state of sustainable wonderfulness. As for that spot of bother, the recent 10% decline in stocks: ho-hum, nothing to see here, just a typical "healthy correction" in a never-ending bull market, the result of flawed volatility instruments and too many punters picking up dimes in front of the steamroller. Now that's winding up, we can get back to "creating wealth" by buying assets--$2 million homes in Seattle that were $500,000 homes a few years ago, stocks, bonds, private islands, offshore wealth funds, bat guano, you name it. Just borrow whatever you need to borrow to buy more. (But don't buy bitcoin. No no no, a thousand times no. It is going to zero, Goldman Sachs guaranteed it.)

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